The Government will bail out New Zealand universities at a cost to the taxpayer of $128 million over two years, calling it a "temporary boost".
It will also review the higher education funding system.
An additional $128 million will be injected into the tertiary sector to increase tuition subsidies at degree-level and above by a further four percent in 2024 and 2025, a joint statement from Finance Minister Grant Robertson and Education Minister Jan Tinetti said.
The funding boost was additional to the 5% increase provided at Budget 2023, which the Government calls the most significant funding increase in 20 years.
Victoria University of Wellington and Otago University have proposed major changes to courses and job cuts as they battle large deficits.
Tinetti said the Government had heard the concerns of the sector.
“When we began our Budget process Universities and other degree providers were forecasting enrolment increases. The opposite has occurred, and it is clear that there is a need for additional support.
“This funding will help maintain the quality and breadth of higher education offerings and research capability in our tertiary institutions. This is vital for our students, our tertiary workforce, our broader research system, and for economic and social wellbeing in New Zealand. It will not resolve all the issues that universities are facing, but it should make a positive difference.
“The funding boost will go to all degree granting institutions including Wānanga and Te Pūkenga."
She noted that while focus had been on Victoria University of Wellington and Otago University, other institutions had previously managed declines in student numbers.
"We did not want to disadvantage those institutions which in some cases had already made difficult decisions.
“Presently, our tertiary institutions are experiencing an unexpectedly large decline in domestic enrolments and increased cost pressures. In addition, although international enrolments are increasing, they remain well below pre-Covid levels. Similar issues are being faced by tertiary providers worldwide."
She said there also needed to be a "thorough look" at the funding system.
“The current financial situation of some tertiary institutions points to the need take this broader look into the way our higher education system is funded and financed. Decisions on the scope and approach to the review will be taken before the end of 2023.
“The Government remains committed in supporting and working with the tertiary sector, so it meets the evolving needs of students and continues to make a critical contribution to research and innovation in Aotearoa."
Robertson said the funding came from the transfer of underspends in money earmarked for tertiary education, including from the fees free scheme. That underspend had been caused by lower than expected enrolments, he said.
“Tertiary institutions are autonomous and make their own decisions on how best to respond to their financial situation. This funding increase will help universities and other institutions deliver their strategic plans as agreed by their Councils.
"The Government expects the subsidy increase will be considered by when universities make final decisions on their offerings for 2024 and 2025.
“As part of its decisions Cabinet has asked for a report back by the end of July on whether recently announced changes represent a threat to capability or provision of programmes nationwide."
The Government will also review higher education funding, including the Performance Based Research Fund.
"Today’s funding announcement is a temporary boost for two years," the joint statement said.
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